As crypto investments grow, so do the responsibilities of the best way to store your own crypto. In this beginner-friendly guide, we'll explore the different options for cryptocurrency storage and help you decide which method is best suited to safely house your crypto coins. Let’s start!

What is cryptocurrency storage?

At its core, cryptocurrency storage refers to how you hold the private keys that control access to your digital funds. Whenever you own a coin or token, what you really possess are the cryptographic keys that signify your right to spend those coins on the blockchain.

To access and use your crypto assets, you must store these private keys in a crypto wallet or hardware device. Properly securing these keys is therefore of utmost importance to protect against theft or loss of funds. If you need more guidance, make sure to check out “How to set up a cryptocurrency wallet?”.

Why does crypto need storage?

There are a few main reasons why cryptocurrency requires dedicated storage solutions. Firstly, digital currencies do not have a centralized authority that can reimburse you if your crypto coins are stolen, unlike traditional money insured by banks.

This puts the responsibility of security entirely on individual users. Storing private keys online or on a smartphone can make them vulnerable to hacking or phishing scams.

Third, many cryptocurrencies have irreversible transactions, so accidentally sending funds to the wrong address could mean losing your coins forever. Security should therefore always be the top priority when deciding how to house your digital wealth. Therefore, crypto needs proper, secure storage.

Types of cryptocurrency storage

There are three main categories of storage for crypto enthusiasts to consider:

Crypto exchange

Keeping crypto on centralized exchanges for the long term is not recommended due to security concerns. Crypto and crypto exchanges have been victims of large hacks that have led to losses of user funds. Your coins are only as safe as the exchange's security practices.

Hot crypto wallet

Mobile and desktop wallets require an internet connection to function. They are more secure than crypto exchanges but less so than cold storage, as private keys are accessible when the device is online and vulnerable. Regular backups of recovery seeds are a must.

Cold storage

Taking your private keys fully offline, like with a hardware wallet, provides the highest level of security against hackers or malware. You can check out “Types of crypto wallets” to learn more about these digital wallets.

Hardware devices use air-gapped security that stores keys on a dedicated chip not connected to the internet. They are far more resistant to compromise than online alternatives.

How do you compare the types of cryptocurrency storage?

Each type of cryptocurrency storage has its pros and cons, depending on your needs. Exchanges are best for active traders, while hot wallets offer more control over everyday spending.

But for long-term "set and forget" storage of significant holdings, most experts recommend non-custodial cold storage. Hardware wallets are the gold standard, providing great encryption and physical separation of private keys.

Although more expensive upfront, the peace of mind from having your cryptocurrency truly under your control and secured offline makes it worthwhile, especially when we're talking about large crypto portfolios.

Choose based on how you intend to use your coins, and never store more than you're actively transacting on cryptocurrency exchanges or hot wallets.

Should I keep my crypto on an exchange or wallet?

Storing long-term holdings on cryptocurrency exchanges is generally not recommended due to security risks, unless you regularly move sums in and out as an active trader.

Exchanges have suffered hacks before that resulted in the theft of user funds, while you alone shoulder the liability for lost or stolen coins there. Mobile or desktop hot wallets connected to the internet are somewhat safer in your direct control but still carry hacking risks if devices become compromised.

For the security of significant crypto-caches, using non-custodial cold storage solutions takes private keys fully offline, putting you in sole possession of your funds' access.

Hardware wallets are the top choice, with built-in security chips and no connection to networks or browsers. They remove centralized trust risks and provide military-grade encryption to protect holdings with "set it and forget it" convenience.

Of course, hot wallets or crypto exchanges have their place for coins you frequently trade or spend online. But for long-term storage, offline cold storage solutions should give you the safest peace of mind.

What is the safest way to store crypto?

A non-custodial hardware wallet is generally considered the safest option available today for properly securing your cryptocurrency for the long haul.

Hardware wallets store your private keys independently in a secure offline environment, untethered from internet networks or web browsers that could make them vulnerable.

They use military-grade encryption and physically isolated secure elements to house keys, removing the hacking risks that other "hot" digital or exchange-based solutions carry.

Some key benefits of hardware wallets include complete control since no third party holds your funds, durable storage safely removed from exposure, simple "set and forget" usability for passive holdings, and compatible recovery if ever needed via stored seed phrases.

A hardware wallet offers true peace of mind by providing full ownership and protection against all potential threats, without relying on external infrastructure or centralized parties.

By placing a hardware wallet in secure offline storage and following proper backup procedures, individuals can secure significant crypto holdings for both the present and long-term future of this burgeoning asset class.

One company at the forefront of crypto security solutions is Cryptobunq. Cryptobunq offers various crypto services, including custody and wallet, exchange APIs, checkout and invoicing, and more, as a secure one-stop-shop crypto service provider.

For example, their multi-asset wallet provides easy access to over 100 coins in one place while maintaining military-grade security standards. Cryptobunq's industry-leading protections give users confidence by securely holding their funds. Therefore, you can trust CBQ to secure your crypto assets.

The bottom line

While crypto exchanges have their place, non-custodial hardware wallets used in conjunction with organizations providing cutting-edge security solutions represent arguably the safest approach for those seeking maximum protection of substantial cryptocurrency holdings, both short- and long-term.

Whether choosing crypto service providers like Cryptobunq or simply investing in a hardware wallet, prioritizing security should always be a top concern for any crypto enthusiast or investor. If you want to benefit from secure crypto wallet solutions with CBQ, contact us today and keep your assets safe!